After more than a year of probing controversial mutual fund fees in Canada, regulators have decided that more research is needed before they can determine whether a crack down is needed.

Investor advocates urged the regulator Monday to conduct the research quickly and to rely on independent data rather than industry figures.

“Much time already has passed and there are legitimate concerns about the way these fees distort the advice Canadians receive daily,” said Neil Gross, executive director of the Foundation for the Advancement of Investor Rights (FAIR Canada).

After more than a year of debate and consultations, including industry roundtables and discussion forums, the Canadian Securities Administrators issued a “request for proposals” Monday for two pieces of additional research.

The first research project is to evaluate the extent to which sales and trailing commissions influence fund sales. The second will look at whether fee-based or commission-based compensation changes the nature of advice and long-term investment outcomes.

Some investor advocates are urging regulators to scrap embedded commissions they say enrich the investment industry at the expense of average investors who may not even know what they’re paying.

The CSA, the umbrella group for provincial securities regulators, has been studying fund fees since late 2012 when a paper was published that identified potential “investor protection issues” arising from the current fee structure.

“The CSA has decided that third-party research would provide important information in determining whether regulatory action is needed,” the securities organization said in a statement Monday.

Mr. Gross said FAIR Canada is glad regulators are taking a “close, hard look at the issues,” but urged the CSA to wrap up the research quickly.

He added that his organization hopes regulators are committed to getting research data from “independent and verifiable” sources.

“It should not simply be data provided by fund companies or dealers since they have a significant financial interest in the policy outcome,” Mr. Gross said.

In a draft statement of priorities issued last week, the Ontario Securities Commission, a member of the CSA, proposed completing research into fund fees by early 2015. Canada’s largest capital markets regulator said “actionable” results should be identified and a recommendation made about whether or not to cap or ban embedded commissions.

An OSC staff notice setting out “key findings” is to be published by early next year, according to the draft document.

The study by Keith Ambaschteer* at U of T Rotman, placed the harm to retail Canadian investors from retail fund costs at 3.8% skim or gouge each year. If this were applied to the trillion dollars that Canadians hold in mutual funds, perhaps we are talking about nearly $40 billion in harm to Canadians. This number, for perspective compares with this comment from 2008 from the Canadian Justice department** "In 2008, the total (tangible) social and economic costs of Criminal Code offences in Canada were approximately $31.4 billion."

When I add in the unique marketing harms aided by exemptions to securities laws, and securities regulator inability to "look directly into the sun" (the source of salaries to OSC and ASC heads in excess of $700,000) plus retail sales tricks and traps that I saw so prevalent (80% of sales to retail customers) while I was in the business......I personally come up with closer to $50 billion in harm to Canadians each year from simply abusing the asymmetry of information between investment dealers and customers. In other words sales trickery. I outline how I arrived at the $50 billion number in a presentation given to Southern Alberta Council on Public Affairs***. I describe in a shorter video, how fees, on top of fees, on top of fees can be found in the sale of mutual fund products to trusting and vulnerable mutual fund investors, in this talk given at the launch of THIEVES OF BAY STREET****.

CALGARY – May 15, 2013 - Provincial Court of Alberta Judge A.A. Fradsham has ruled that Securities Act (Alberta) provisions that allow the Provincial Court to impose penal sanctions, including heavy fines and imprisonment, upon those found guilty of fraud and misrepresentation are within the constitutional powers of the Province of Alberta.

Three Respondents facing charges in Provincial Court of fraud and misrepresentation under provisions of the Securities Act (Alberta) challenged the constitutionality of those provisions, arguing that they are in fact criminal law powers, which are the exclusive jurisdiction of the federal government.

Judge Fradsham dismissed the application stating: “The Securities Act is designed to cultivate a fair and efficient capital market in Alberta...The dominant purpose of [these provisions] is to act as a deterrent to investors who are tempted to breach the Securities Act. Deterring would-be offenders serves the Securities Act’s main purpose of ensuring that the securities market is not tainted by actors who are unwilling to trade or sell securities honestly.”

The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted to foster a fair and efficient capital market in Alberta and to protect investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.

Thank you very much for your solidarity on this matter Robert. I feel that the raw evidence of a corrupt financial system, and how it is using frail elderly seniors in Kelowna as a means of generating undue enrichment for financial brokerages, is a good starting point for getting the founding purpose of the Occupy movement understood as being relevant in this community.

For the past 4 years I have been researching the behavior of a number of investment dealers in Kelowna, and I have become involved with complaints to the Investment Dealers Association, [now Investment Industry Regulatory Organization of Canada IIROC]OBSI [Ombudsman on Banking, Securities and Investment] and numerous bureaus of the federal and provincial government that are supposed to be set up to prevent deceptive practices by financial advisors. During this time, I have seen an incredible amount of buck-passing, and rationalizing of criminal activity. The police in Kelowna have undermined the interests of seniors who have attempted to get help when they have been defrauded. The police have refused to look at the black and white evidence of misrepresentation, and instead have confronted a broker, making vague comments about a senior who is not happy with the actions of that broker, and the financial company has alleged that the problem is all "misunderstanding" by the elderly investor, and the police have accepted such sidestepping without any genuine investigation.

Issues that are identified in the record include:

✹Use of the term "guarantee" in a way that would never be accepted in standard English - brokers currently are allowed to lie to their client who is asking to buy GICs, and instead the dealer will palm off "segregated funds" which are mutual funds, but are not governed by the Mutual Fund Dealers Association. The company puts its "house insurance" on the mutual fund, and then claims that it is "guaranteed". This guarantee can only be for a fraction [75% of principal] and only collectable if the client dies. This is an outrageous twisting of definitions to someone who is requesting guaranteed savings. I personally have witnessed this kind of treatment completely destroy the spirit of an elderly and sick senior, who told me that the world is "now too corrupt to live in".

✹ Some of these "seg funds" are locked into a 7 year term - without the clients authorization or knowledge. This lock-in is to secretly provide a 5% commission to the investment advisor - who pockets this commission up front for hijacking the senior's savings.

✹It is also accepted by at least one brokerage in Kelowna that creating false records of how trades are initiated and marking commission slips as "unsolicited" when the broker is the only one initiating the trades - is treated as perfectly OK - even when it is done for no reason other than to generate unnecessary commissions for the dealer.

This lawless atmosphere leaves the elderly victims of financial fraud in this city completely on their own. The BC Centre for Elderly Advocacy and Support in Vancouver - of which I am a member - only offers advocacy help for those who live in the Vancouver area. Therefore we essentially are allowing a system of impunity to utterly destroy confidence in the integrity of the financial industry within Kelowna.

When we allow our financial apparatus to lose the confidence of our investors who are looking for guaranteed savings and shielding their savings from market gyrations, this causes capital to be lost in this area, as investors will send their investment portfolios to places where the criminal code is actually engaged in by regulative agencies, and by law enforcement. I have personally been told by the OBSI and the BC Securities Commission staff that they are "not allowed to discuss the Criminal Code". This gross irresponsibility serves to prevent a community standard from being articulated, and where there is no community standard, police are very reluctant to get involved. This creates a downward spiral of lawlessness.

I feel that once we have reasserted the Criminal Code as the main regulative tool governing the sale of securities, and the investment industry understands that it is accountable to the community that it operates in, then we will have a basis for achieving a lot of the grievances of the Occupy actions. The fractional reserve banking system, for example, would be best tackled once the issues relating to deceptive manipulation of capital is outlawed completely, and all financial organizations are persuaded to accept that deceptive financial customs are no longer tolerated by the population.

The attached file is a review of some of the rules in the Criminal Code on the matter of deception in the sale of securities. This has just about been completely sidestepped by the industry - claiming over the past 2 decades that the industry should be "self regulating". This tripe has been to a great extent been lapped up by far too many agencies and government officials, and it has seriously damaged the capitalization available to local business and has harmed the local economic self sufficiency of this city. Occupy could help a great deal by determining how candidates for our local election feel about asserting a high community standard insisting that the weak and elderly be protected against these racketeering-like industry practices.

I would like to discuss this further with you on Saturday morning at Kerry Park, and I would appreciate your forwarding this message to Darin, so that we can complete the survey of all municipal candidates.

The US SEC's handling of the Stanford International Bank fraud is an example of why you cannot combine securities regulatory enforcement with securities criminal enforcement. Separate regulatory and criminal enforcement agencies are an essential check and balance on the system. It is deeply disturbing that the securities criminal policing system of Canada relies so heavily upon the securities regulatory enforcement system for its public complaints intake . If the US SEC is captured by the investment industry, how can we expect anything different in Canada's smaller more fragmented securities regulatory system. The only hope we have for bringing integrity into securities criminal enforcement in Canada is to create the new Multi-Disciplinary Investment Fraud Agency that we are proposing.

Former Fort Worth Regional Office Enforcement Chief Spencer Barasch, after leaving the SEC, sought three times to represent Mr. Stanford as he fought the agency's case, and he briefly represented Mr. Stanford in 2006. The SEC made referrals to the Texas state bar and the Washington, D.C., bar as well as to criminal authorities to investigate whether Mr. Barasch violated any laws by representing Mr. Stanford, SEC Enforcement Chief Robert Khuzami said in testimony before the U.S. House Financial Services Oversight Panel.

SEC Inspector General David Kotz told senators in a hearing last fall that he had spoken with the U.S. Justice Department about opening a probe into Mr. Barasch.

During the hearing, Rep. Randy Neugebauer (R., Texas) asked Mr. Khuzami if he knew Mr. Barasch had represented a client before the commission last Friday. "I was not aware of that," Mr. Khuzami said.

Mr. Neugebauer said that he doesn't believe the Texas state bar has received a referral regarding Mr. Barasch.

Lawmakers at the hearing, many of whom said they represent investors in $7 billion of bogus certificates of deposit issued by Stanford International Bank Ltd., expressed dismay that the SEC hadn't disciplined Mr. Barasch and other senior enforcement managers who allegedly stifled attempts to investigate the scheme.

"I don't think the agency is going to change much because I don't see anything where people are being held accountable and responsible," Rep. Steve Pearce (R., N.M.) said.

Mr. Khuzami and SEC Examination Chief Carlo di Florio testified the SEC couldn't punish people who have left the agency. Mr. Barasch left the SEC in 2005. He now leads the corporate governance and securities enforcement team at Dallas law firm Andrews Kurth LLP. Mr. Barasch couldn't immediately be reached for comment.

Mr. Khuzami noted that SEC ethics rules bar former employees from ever representing clients before the commission on matters in which they had been heavily involved when they worked there.

SEC spokesman John Nester said the SEC can't move to bar a lawyer from appearing before the commission in the absence of a finding in an SEC administrative hearing that the person acted improperly or unethically or if another court enters into a judgment against the person after being sued by the SEC. Lawyers that have been criminally convicted or disbarred also cannot appear before the commission.

Mr. Neugebauer asked whether the ethics rules prohibited former employees from advising clients on SEC matters even if they don't serve as the client's agent before the commission. Mr. Khuzami said he believed former employees could advise clients on their dealings with the SEC in some situations.

Mr. Neugebauer said the rules should be tightened.

Senior enforcement staff in the SEC's Fort Worth office failed for years to open an investigation into the Stanford bank's certificate of deposits despite numerous red flags, including the conclusions of SEC examiners stretching back to 1997 that they were bogus, the SEC's internal watchdog concluded in a March 2010 report.

Mr. Stanford has pleaded not guilty to criminal charges, detailed in a 14-count indictment, that he operated the fraud. He is now awaiting trial, set for September, in a federal medical facility in North Carolina where he is receiving psychiatric treatment.

The SEC will soon determine whether victims of the Ponzi scheme should be covered by federal insurance meant to compensate people missing securities held by brokerages, SEC Deputy Solicitor Michael Conley told lawmakers at the hearing.

The SEC will determine "in the next few weeks" whether the Securities Investor Protection Corp. is wrongly refusing coverage to victims of the fraud, he said. Victims of the fraud have argued for years they deserve compensation from SIPC for the amounts they invested, but SIPC found they aren't covered by federal insurance for failed brokerages because the certificates of deposit were being held at a bank.

Julie Preuitt, an employee of the Fort Worth office who used to manage examination staff, testified as part of a second panel of witnesses that she was still being retaliated against for raising concerns a few years ago about a new "quick-hit" approach to broker-dealer examinations being pushed by her superiors. Ms. Preuitt tried to bring the alleged Stanford fraud to the attention of investigators in her office several times, beginning in 1997. Her supervisory duties were removed after she confronted her superiors about the broker examinations.

Ms. Preuitt told lawmakers she still has little work and no supervisory duties, and that her superiors continue to isolate her.

Mr. Di Florio praised Preuitt for doing a "terrific job" attempting to uncover Stanford's fraud. He said, "We are working closely with Ms. Preuitt right now to structure a portfolio of responsibilities that we think demonstrate her talents to the fullest potential," including exams "of national significance."

Gary Logan was responsible for designing a new mortgage fraud enforcement system covering the complaints intake and protocol for mortgage fraud investigations being assigned to different police services agencies in Ontario. Two weeks ago, one of the Ontario lawyers who committed mortgage fraud was arrested by Peel Regional Police. He had been disbarred by the LSUC in November 2010. Here is the story about this arrest in the Law Times on March 14, 2011.

This story illustrates that the LSUC did not find it to be in its mandate to turn their LSUC investigation evidence over to the police for criminal investigation and prosecution. We have exactly the same problem with the Mutual Fund Dealers Association, the Investment Industry Association of Canada and quite frankly, the Ontario Securities Commission also. This arrest also illustrates the effectiveness of a centralized assessment unit for fraud that still draws upon the resources of the investment fraud division of Municipal Police Services, as was done in this case.

The Securities Crime Unit proposal developed by Gary Logan reverses the method of investment fraud complaints intake so that victim complaints come in at the top for criminal assessment rather than in at the bottom for the self-regulatory organizations to assess criminal conduct that is shifted up to the police for criminal investigation. Self-regulatory organizations are neither trained, nor naturally inclined to find criminal conduct that may harm the reputation of their industry or profession.

(advocate comments......see article from Law Times in "Law Society Failing Society" flog topic at this site)

How does the alleged mastermind behind a $27 million Ponzi scheme walk away free without ever undergoing a criminal trial?

This is the troubling question now being raised by everyone from his alleged victims to Ontario’s attorney general.

This week, it was revealed that fraud charges have been dropped against Tzvi Erez, 43, of Toronto, partly because “the courts just didn’t have the resources to deal with a long, protracted fraud case,” according to lawyer Lou Brzezinski, whose client, Willy Tencer, was the sole complainant.

But in a civil suit, also filed by Tencer, it was alleged Erez defrauded more than 70 creditors, amounting to losses of $27 million.

“(I’m) a little bit shocked that our judicial system was so overworked that we would drop charges in a case such as this,” Brzezinski said.

“I’m afraid (people) will see this story and realize that the current criminal process will not provide to them justice at the end of the day because the Crown doesn’t have enough money to proceed.”

Attorney General Chris Bentley reacted with concern to the dropped charges, insisting Tuesday that the province “does not walk away” from criminal cases.

“We have resources for the cases that need them and where more are required, we find them,” Bentley said. “I have asked the chief prosecutor to get to the bottom of it, and I’ve asked for the report as quickly as possible.”

Erez, son of a well-known developer and one-time classical concert pianist, is accused of running a Ponzi scheme through his printing business, E Graphix, which is now bankrupt.

Erez is alleged to have used money from new investors to pay returns to his original investors, concocting forgeries to present his business as profitable.

In June 2009, Erez was charged with one count of fraud over $5,000, seven counts of forgery and failure to comply with probation conditions relating to a previous conviction. The charges stemmed from evidence provided by Tencer, who allegedly lost about $1.2 million.

According to a receiver’s report ordered by the civil court in Tencer’s suit, more than 70 investors were victimized by Erez. The civil court ultimately found Erez had no assets and he was declared bankrupt in October 2009.

The Crown decided to drop the criminal charges last Sept. 22. Brzezinski said he was given two main reasons by assistant Crown attorney Donna Gillespie:

1. Tencer, an experienced businessman, failed to perform his due diligence and should have avoided what was clearly a risky investment.

2. As well, the courts were tied up with more serious cases involving violent crimes and had insufficient resources to pursue a complex fraud case.

Gillespie and Crown Attorney Christine McGoey would not comment.

Brzezinski said he doesn’t blame the Crown, which was forced into making a “proverbial Sophie’s choice.”

“Are we going to let a violent criminal walk because we’re spending . . . hundreds of man hours tracking down the Ponzi scheme?” he asked.

“What we need is more Crowns. . . . And more money spent on our judicial system.”

Elliot Steiner, a 47-year-old real estate developer, invested $225,000 with Erez. He also doesn’t blame the Crown, placing some of the responsibility on himself. Like many of Erez’s alleged victims, Steiner never filed a formal complaint with police.

“It was my impression, perhaps naively, that the police would come to us when they were ready,” he said, adding he will now approach police.

But for one Toronto businessman who lent money to Erez, the Crown’s decision sends a “disgraceful” message about Ontario’s attitude toward white-collar crime.

“It’s like hanging a sign up saying, you know, fraud is all right in Ontario,” said the creditor, who declined to give his name. “It sends out, certainly, the wrong message.”

The National Securities Regulator is not the panacea for prosecution and deterrence of white collar crime, when its governance structure is opaque and controlled by the investment industry itself. There is a high risk, based on what we know so far about what is proposed for the governance structure and the integration of securities regulatory and criminal enforcement, that the new National Securities Regulator will have less output and less integrity in criminal enforcement than what we have today. There will be almost no prospect for the systemic fraud at the highest levels of the investment banking industry to be stopped, without an independent Securities Crime Unit.

If you watch the video at www.ismymoneysafe.org, one will come to realize that even with a National Securities Regulator, the process of dealing with Earl Jones and other rogue fraudsters would likely be the same as now. In billion dollar plus public market frauds, the National Securities Regulator will be in a better position to cover up the frauds and protect the senior executives and professionals involved, unless you also have the independent SCU in place to keep these people in check.

My understanding is that the Federal Government intends to integrate criminal policing with administrative enforcement within the National Securities Regulator. This will be the fox guarding the hen house. David Wilson, Chairman of the OSC, has over $15 billion billion in losses on Income Trusts, a product which has a deceptive yield and was shut down in the US. Income Trusts were started up in Canada, after it was shut down in the US when the US Department of Justice imposed a deferred criminal prosecution on Prudential Securities, which had to pay $2 billion in restitution to its investor victims and a $40 million fine for selling the same product to seniors and other unsophisticated investors. After this US criminal prosecution, Canada's Income Trusts developed into a $200 billion dollar industry, that acted as predator of senior investors.

The real fraud in ABCP will probably never be dealt with by the RCMP IMET, yet some like Diane are aware of how the fraud was executed and have explained it to the regulators. If you go to the site www.investorvoice.ca and move to the right, you will see our citizens' fight for restitution on ABCP. Scroll down and you read all the stories. Diane and Henry Juroviesky, a Toronto lawyer, got a $188 million settlement for 1800 families and worked at pushing the regulators to force another $140 million settlement. The retail ABCP owners are now trying to get criminal justice and it is one hell of a fight.

The same players involved with the regulators for the National Securities Regulator are working to ensure that the RCMP IMET will remain controlled by integrating them with the regulator. They have it set up now that a criminal investigation can only start if it is referred from a regulator to the RCMP IMET. One cannot go direct to the police as we want for the SCU.

The article by Jeff Buckstein was interesting. The largest fraud in Canadian History was ABCP. My suggestion for you is to invite Diane to the Canadian Police College and have her take police officers, accountants, and others through the fraud in ABCP. Judge Collin Campbell appointed her as the financial analyst in the court for the retail owners . She got the largest financial settlement in Canadian history for the retail clients. The retail clients now finally have an RCMP ABCP criminal investigation on the go, but none of the ABCP retail victims have been interviewed as far as we know.

If you provide the forum, Diane will provide the information and education. Yes interview protocol is important, but so is prosecutions when you have the expertise of Diane willing to assist in a criminal prosecutions. She has tried twice to get an investigation started during the ABCP crisis and it appears there are always junior analysts put on the case. Mike Miles out in Victoria, B.C. leads a retail group wanting a thorough investigation into the ABCP fraud.

John, Diane managed to get Mr. David Wilson removed from overseeing any investigation by the OSC of ABCP. He still was head of the OSC but could hold no responsibilities for any investigation of ABCP. The OSC and the IIROC had several meetings with Diane to understand ABCP. So there was a court settlement of $188 million for retail owners and another $150 million regualtory settlement for other impacted parties. Yes, she beat Purdy Crawford, the head of the Pan Canadian Committee that lead the restructuring of ABCP. If Purdy had his way the retail parties would have gotten next to nothing. Mike Miles would be happy to assist in any way in getting the criminal investigation going. Yes, we are after the big boys who structured and sold it, so you will need the expertise of Diane to assist in understanding this fraud. The US SEC is taking on Goldman Sach`s for its central role in packaging toxic structured credit products steeped full of high U.S. subprime mortgages that were designed to fail. Its time Canada stepped to the plate, so that our country`s citizens are not the dumping ground for toxic investment waste. Dean Buzza, many ABCP victims are waiting for the criminal investigation of ABCP. Mike Miles is concerned because he has not heard back from any of you.Please no more junior analysts. No more excuses just action please. I spent 18 months answering the phone for the victims and they are still in a state of shock even though they got their money back. The Shock is the RCMP's lack of action to do the ABCP criminal investigation. Does Purdy Crawford and his men run the RCMP? ( Canada's Largest Excise Tax Fraudster )

When I first asked the RCMP to help us with my claim, I asked for Sgt. Penner, but he was not available so the RCMP assigned Constable Melanie Coons to look at our case. She told me that she never had too much experience at this, but she would do what she could. We never heard from her for quite a while and I went back to their station to see her, but she had been assigned to another location. They let me see another constable. I showed him our claim [affidavit] that we put together about the claim against Canaccord Capital.

Canaccord had our savings in their company for about 4 years. Things went by OK most of that time, but we noticed Mr. Ritchie would phone us quite often for permission to buy something different. For a while, we thought that this was probably OK, but we began to notice that every time he called to make one of these transactions, that he would charge a big commission fee. We would tell him we thought it was too much, but he would say that was the rules.

This constant calling to trade went on until June 2006, when he called my wife and I to his office, saying that he had something that we might like. He handed a paper to my wife and said to her "you have to sign this". My wife was in her last few months of life at that point, and was very uncomfortable having to leave the house, and to concentrate on business matters. So she signed the paper, and asked if we could leave so that she could go home and lay down. I did not like that paper; it had a lot of small print. I said that I did not want to sign this document, having difficulty reading the small print. Mr. Ritchie said not to worry, that the buy was a low risk. I then signed, so that I could hurry back home so that my wife could get comfortable. When I got the statement for July 2006 we had lost about $9000. We went in to get Ritchie to put our savings in GICs and he said that he would not do this, saying: "You can't live with that". By the time we transferred our account out of there, we had lost $27,000 from this particular account, 312-A. Other accounts were also significantly down due to dishonest dealing by Ritchie and Canaccord.

Mr. Ritchie phoned about the second week in October of 2006 and asked for permission to take money out of another investment [229-A] to buy Leon Frazer Notes. My wife was getting worse with her health and we both were very worried, I told Ritchie "I'm not in favour of that deal and want no part of it." Mr. Ritchie went and made that trade against my wishes, and when we got the statement, we had lost over $19,000 when we moved the portfolio away from Canaccord. Most of the $19,000 went to Ritchie's commissions. All of this was against what I had asked for.

We had our savings moved over to Investors Group in 2007 and we had an agreement with the advisor to put our funds into GICs and bonds. Karen Erickson was the advisor. She told us that she would treat us honest, just like she treats her mother with her investments. My wife and I were glad we had found someone who was honest. That's why she got the job. The end of 2007 we found we had a loss recorded on our December 2007 statement.

I phoned Karen and asked how can this be? She said I have to come over to explain.

She came to our house and started talking about financial and estate planning. I quickly told Karen that this kind of service is unnecessary and not requested by me. I told her that all of my final expenses are arranged and paid for, and I have a will that has been set up. I have no mortgage or other insurable liabilities. I said to her that I am planning to divide my savings three ways next year and put it into the names of my three kids. She said that she would not do this, saying "I'll write the cheques for your kids once you die". She had everything made out in her favour. The Seg Fund that she put most of our savings in generated about a $25,000 commission to her as a deferred service charge, that would require the money staying in that account for 7 years in order for me to avoid any penalties in taking this out. Unfortunately, Karen did not discuss this with me at all, and I found out after the second year of dropping in my account, that this money was locked in to this DSC plan. This Seg Fund does not meet my definition of what a "guarantee" means, if it only guarantees 70 or 75% of the principal. When I got my 2008 statement, I had lost almost $50,000.

That was when our opinion of Karen changed from "honest" to "dishonest". I went over to the RCMP again and was able to speak to Constable Kincaid. She said that she used to work with Nesbitt Burns, and she said that they were "so dishonest that she had to quit". She looked over my portfolio and did see something that was not quite right. And Constable Kincaid contacted Karen and her boss, Paul Demay and told them that they will have to give back my savings that were taken by the actions of these brokers. They did not act on what Constable Kincaid said, and since then Constable Kincaid has not been available for comment. I have tried repeatedly to reach her by phone, but I have never been able to get a returned phone call.

I maintain that I never saw any of the fine print that is part of the document that I signed that says that these investments are not guaranteed. I maintain that Karen Erickson told me that these investments were guaranteed, and that any reference to the contrary must have been covered up when I was signing for this deal. When I signed, I was just coming out of the hospital from surgery for a ruptured appendix and I was too weak to question anything that was happening. I was relying on the truthfulness of the statements that Karen Erickson was making to me. At all times when we were speaking with Karen Erickson, we were asking for only guaranteed investments and no-gambling bonds, and I was under the impression that this was what she was offering.

With all this dishonest dealing, I wrote the President of Investors Group and he turned it over to his compliance officer. He told me to take it up with the OBSI.

I tried several times to see Constable Kincaid and left several messages on her answering machine, but she seems to be completely unavailable. This is a serious problem, because she has a lot of knowledge on just how dishonest the investment industry can be in Canada. I think that it is extremely necessary to have knowledgeable police involved with the problem of predatory investment dealers.

I have not given up yet, and I have asked to see Sgt. Penner. The local detachment has said that he is stationed up at the airport. His assistant did phone me and I had a long talk with her. She said there is not much they can do. She said: "You should take the loss and move on…" I told her $49,000 is a lot of money to lose, as I was then 89 years old and needed to help my kids with their debts. It is not my fault and I feel that I should not have to be victimized because brokers are allowed to adopt deceptive business practices in the sale of securities. The Criminal Code is explicit about any hint of deception in the sale of securities being against the law. It is only because of the SRO [self regulation] that has crept into the investment field over the last couple of decades – that this predatory lying is tolerated. I think that the police can do more to solve this kind of problem.

Every one of the criminal offenses listed here have been swept under the carpet by a financial regulatory system in Canada who places it's industry "above examination", and by a criminal justice system in Canada which buys into this "above examination" story. If this does not bother you, then just wait until you learn just how much financial abuse you are already suffering from.

361.1 (1) A false pretense is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that it is made with fraudulent intent to induce the person to whom it is made to act on it. (2) Exaggerated commendation or depreciation of the quality of anything is not a false pretence unless it is carried to such an extent that it amounts to a fraudulent misrepresentation of fact.

False Pretence or False Statement

362. (1) Every one commits an offence who(a) by a false pretence, whether directly or through the medium of a contract obtained by a false pretense, obtains anything in respect of which the offence of theft may be committed or causes it to be delivered to another person;(c) knowingly makes or causes to be made, directly or indirectly, a false statement in writing with intent that it should be relied on, with respect to the financial condition or means or ability to pay of himself or herself or any person or organization that he or she is interested in or that he or she acts for, for the purpose of procuring, in any form whatever, whether for his or her benefit or the benefit of that person or organization.

Obtaining credit by fraud or false pretense [subsec. (1)(b)] … Furthermore, there is a presumption that where money was obtained by a false pretense, prima facie , there is an intent to defraud.

Obtaining Execution of Valuable Security by Fraud

363. Every one who, with intent to defraud or injure another person, by a false pretense causes or induces any person(a) to execute, make, accept, endorse or destroy the whole or any part of a valuable security, or(b) to write, impress or affix a name or seal on any paper or parchment in order that it may afterwards be made or converted into or used or dealt with as a valuable security, is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years. R.S., C-34, s. 321.

The following is extracted from the Justice Department Criminal Code of Canada:

366. (1) Every one commits forgery who makes a false document, knowing it to be false with intent(a) that it should in any way be used or acted on as genuine, to the prejudice of anyone whether within Canada or not; or (b) that a person should be induced, by the belief that it is genuine, to do or to refrain from doing anything, whether within Canada or not. (2) Making a false document includes:(a) altering a genuine document in any material part;(b) making a material addition to a genuine document or adding to it a false date, attestation, seal or other thing that is material; …(4) Forgery is complete notwithstanding that the false document is incomplete or does not purport to be a document that is binding in law, if it is such as to indicate that it was intended to be acted on as genuine. R.S., c. C-34, s. 324.

Cross References

374. Drawing document without authority.

375. Obtaining by forged document.

This section describes the offense of forgery. Every person who makes a false document, knowing it to be false, with the intent that it should be used as genuine to the prejudice of another person, or that another person should be induced, believing the document to be genuine, to do or refrain from doing anything, commits the offence of forgery.

Annotations – Meaning of “false document”

The provisions of this subsection do not exclude the definition of “false document” in s. 321. Thus the accused may be convicted of forgery where he makes a “false document” as that phrase is defined in s. 321. Specifically, the accused makes a “false document: where he prepares a document which is false in some material particular. A document which is false in reference to the very purpose for which it was created is clearly one which is false in a material particular…It is not necessarily the case that a document which merely contains a lie falls within the definition of a false document. However, a document which is false in reference to the very purpose for which it was created is one that is false in a material particular within the meaning of s. 321 and therefore capable of founding a conviction under this section. R. v. Ogilvie (1993), 81 C.C.C. (3d) 125, [1993] R.J.Q. 453 (C.A.)

Punishment for Forgery

367. Every one who commits forgery(a) is guilty of an indictable offence and liable to imprisonment for a term on exceeding ten years; or(b) is guilty of an offence punishable on summary conviction. R.S.C., c. C-34, 325; 1994. C. 44, s. 24; 1997, c. 18, s. 24.

Cross References

Forgery is defined in s. 366. This offence may be the basis for an application for an authorization to intercept private communications by reason of s. 183. Forgery is an enterprise crime offence for purposes of Part XII.2

This section describes the offence of uttering a forged document. Any person who, with knowledge that a document is forged, uses or acts upon it as though it were genuine is guilty of the offence of uttering. … that an intention to defraud is not an element of the offence under this section. Rather, the intent required is the intent to deceive, such an interpretation is consistent with the forgery offense defined by s. 366(1)(b) which as well does not require proof of an intent to defraud.

Drawing Document Without Authority Etc.

374. Every one who (a) with intent to defraud and without lawful authority makes, executes, draws, signs, accepts or endorses a document in the name or on the account of another person by procuration or otherwise, or(b) makes use of or utters a document knowing that it has been made, executed, signed, accepted or endorsed with intent to defraud and without lawful authority, in the name or on the account of another person, by procuration or otherwise,is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years. R.S., c. C-34, s. 332.

Synopsis

This section describes the offence of drawing or using a document without authority. Anyone who makes, executes, draws, signs, accepts or endorses a document in the name of or on behalf of another person without lawful authority and with an intention to defraud, or who knowingly makes use of, or utters such a document, commits an indictable offence. The maximum term of punishment is 14 years’ imprisonment.

Obtaining, Etc, by Instrument Based on Forged Document

375. Everyone who demands, receives or obtains anything, or causes or procures anything to be delivered or paid to any person under, on, or by virtue of any instrument issued under the authority of law, knowing that it is based on a forged document, is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years. R.S., c. C-34, s. 333.

Synopsis

This section creates the offence of using an instrument based on a forged document. Anyone who demands, receives or obtains anything, or causes anything to be delivered or paid, by virtue of an instrument issued under legal authority, but knowing that it is based on a forged document, commits an indictable offence. The maximum term of punishment is 14 years…Sections 487.012 to 487.017 provide procedures for the making of production orders that would require persons to produce documents, data or information to police officers or public officers designated in the order.

HYPERLINK "http://laws.justice.gc.ca/fra/C-46/page-10.html" \l "codese:487_03-ss:_1_1_" Endorsement(1.1) The endorsement may be made on the original of the warrant or on a copy of the warrant that is transmitted by any means of telecommunication and, once endorsed, the warrant has the same force in the other province as though it had originally been issued there.(2) [Repealed, 2007, c. 22, s. 7]1993, c. 40, s. 15; 1995, c. 27, s. 1; 2000, c. 10, s. 13; 2007, c. 22, s. 7; 2008, c. 18, s. 12.Annotations – Meaning of Fraud Generally

The classic definition of fraud is found in the judgement Buckley J., in London & Globe Finance Corp. Ltd. (Re), (1903) 1 Ch. 728 at pp. 732-3 “To defraud is to deprive by deceit: it is by deceit to induce a man to act to his injury. More tersely it may be put, that to deceive is by falsehood to induce a state of mind; to defraud by deceit to induce a course of action.”

…Scott v. Metropolitan Police Commissioner (1974) 60 Cr. App. R. 124 (H.L.) [held] that this definition is not exhaustive and that to “defraud” ordinarily means “to deprive a person dishonestly of something which is his or of something to which he is or would or might but for the perpetration of the fraud, be entitled.”Meaning of “Other Fraudulent Means” Generally: … Other fraudulent means includes mere omission where, through silence, an individual hides from the other person a fundamental and essential information. The silence or omission must be such that it would mislead a reasonable person. R.v. Emond (1997), 117 C.C.C. (3d) 275 (Que. C.A.) leave to appeal to S.C.C. refused 117 C.C.C. (3d) vi.… The dishonesty lies in the wrongful use of something in which another person has an interest, in such a manner that this other’s interest is extinguished or put at risk. The use is wrongful in this sense if it constitutes conduct which reasonable decent persons would consider dishonest and unscrupulous. R. v. Zlatic [1993] 2 S.C.R. 29, 79 C.C.C. (3d) 466.

… Economic loss does not have to be proven by the Crown and fraud is complete when money is paid for corporate shares to which the accused falsely ascribed certain attributes: R. v. Knelson and Baran (1962), 133 C.C.C. 210, 38. C.R. 181 (B.C.C.A.)

Mens rea – The mens rea of fraud is established by proof of subjective knowledge of the prohibited act, and subjective knowledge of the act could have as a consequence deprivation, in the sense of causing another to lose their pecuniary interest in certain property or in placing that interest at risk. There is no requirement that the accused subjectively appreciate the dishonesty of his acts: R. v. Théroux, [1993] 2 S.C. R. 5, 79 C.C.C. (3d) 449; R. v Zlatic, supra.

Every one of the criminal offenses listed here have been swept under the carpet by a financial regulatory system in Canada who places it's industry "above examination", and by a criminal justice system in Canada which buys into this "above examination" story. If this does not bother you, then just wait until you learn just how much financial abuse you are already suffering from.

June 28, 2009Mary Schapiro, chairman of the Securities and Exchange Commission, is correct: Fiduciary standards for all who give investment advice won't be sufficient to deter fraud.High standards are never enough. Consider that every state and municipality has traffic laws and speed limits that are posted and widely known. Yet the same jurisdictions also have police forces to enforce the laws and a jail to house those who violate them.In most fields of endeavor, there are a few people who violate or try to game the rules and regulations for their own advantage. The investment advisory field is no exception, as the Madoff scandal and other recent cases of fraud have reminded us.In fact, as reported in InvestmentNews last week, about a third of the 26 actions that the SEC has brought against Ponzi-type schemes since January involved investment advisory firms subject to fiduciary standards.Simply declaring that all who provide investment advice must adhere to a fiduciary standard and act in the best interests of the client won't make them do so.That is why President Obama's regulatory reform outline, put forward by Treasury Secretary Timothy Geithner almost two weeks ago, is merely a first step.If Congress includes that fiduciary standard in any reform bill it passes — which by no means is a sure thing, given the intensive lobbying that will no doubt accompany the drafting of the law — it must also give the body assigned to regulate investment advisers the additional manpower and resources to enforce the standard.That is true whether the authority and responsibility are assigned to the SEC, which now oversees investment advisory firms with at least $25 million in assets, the Financial Industry Regulatory Authority Inc. of New York and Washington, which oversees the brokerage industry, or the Washington-based Certified Financial Planner Board of Standards Inc., which is angling for the oversight role.The SEC has the staff and structure, but needs more of both to properly oversee and enforce fiduciary standards at thousands of small independent advisory firms.Likewise, Finra has some of the staff and some of the tools it would need for the task, but it would need more of both, and the staff would have to be trained in a new mindset.The CFP Board would need to build the necessary staff and systems almost from scratch, which wouldn't necessarily be a bad thing because the new staff wouldn't have anything to unlearn.Firms whose employees or affiliates give investment advice, whether financial planning firms, investment advisers or brokers, will have to adjust to a new regime. This new world no doubt will include different, probably more intrusive, and possibly more frequent audits — the cost of which will be borne by all financial advice givers.Whichever institution receives a congressional mandate to enforce a fiduciary standard, it will have to conduct new and different audits to catch rule breakers in the act.Just as traffic police in many jurisdictions use radar traps and sobriety checkpoints to catch speeders and drunk drivers, the responsible financial agency will have to be proactive in seeking signs of fraud. It can't wait for bad times to reveal the crooks who prospered in good times.Doing so inflicts too much financial harm on too many investors and damages the integrity of the investment advisory profession and the capital markets.Just as the sight of a police car parked on a highway shoulder deters speeders, so too will the presence of proactive overseers deter financial fraud.

Jail, anyone? Perhaps that’s too harsh, and at any rate premature, but is anyone ever going to be held accountable for the behind-the-scenes sweetheart deals that passed tens of billions of taxpayer dollars through the AIG shell game to the very banks that caused the financial meltdown? Or for the many other acts of double-dealing that left one out of three American homeowners owing much more than their houses were worth while the folks who swindled them were rewarded with hundreds of billions in public money?

Undoubtedly not, since the same folks who are most culpable wrote the laws that made this, and the other scams at the heart of the banking collapse, perfectly legal. And guess what? They’re back at work in the government, writing the new laws that will, they claim, prevent us from being had once again. As a telling example of that process at work, check the official response of the Department of Treasury to the devastating report by the special inspector general for the Troubled Asset Relief Program (TARP), Neil M. Barofsky, titled “Factors Affecting Efforts to Limit Payments to AIG Counterparties.” The main factor was that Timothy Geithner followed the lead of Goldman Sachs CEO Lloyd “I’m Doing God’s Work” Blankfein in crowding the lifeboats with bankers.

Geithner, now treasury secretary, was previously the president of the Federal Reserve Bank of New York (FRBNY), where he negotiated the deal to pay Goldman Sachs and the other top banks in full to cover their bad bets on securitized mortgages. Barofsky’s report concluded that Geithner’s scheme represented a “backdoor bailout” for the financial hustlers at the center of the market fiasco. Noting that Geithner denies that was his intention, the report states, “Irrespective of their stated intent, however, there is no question that the effect of FRBNY’s decisions—indeed, the very design of the federal assistance to AIG—was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties.”

Not surprisingly, the Treasury Department that Geithner now heads defended his actions in not forcing “haircuts” on the full dollar-for-dollar payoff by AIG to the banks while he was at the New York Fed: “The government could not unilaterally impose haircuts on creditors, and it would not have been appropriate for the government to pressure counterparties to accept haircuts by threatening to retaliate in some way through its regulatory power.”

Nonsense, argues Eliot Spitzer, who as New York attorney general was way ahead of the curve in challenging Wall Street arrogance. Writing in Slate on Monday, Spitzer points out: “Pressuring Goldman and the other counterparties to offer concessions would have forced them to absorb the consequences of making suspect deals with an insurance company that was essentially a Ponzi scheme.”

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The Ponzi scheme was based on the collateralized debt obligations (CDOs) in which the bankers traded and which AIG had insured with the credit default swaps (CDSs) that they sold but failed to back with adequate funding. Now Geithner’s Treasury concedes that AIG “should never have been allowed to escape tough, consolidated supervision.” But none of AIG’s scams were regulated, nor were any of the others at the center of the larger financial debacle, because of laws pushed through Congress by Geithner’s boss, Lawrence Summers, when they both were in the Clinton administration. Specifically, they prevented regulation of those opaque CDOs and CDSs that would come to derail the world’s economy.As the inspector general’s report stated: “In 2000, the [Clinton administration-backed] Commodity Futures Modernization Act (CFMA) … barred the regulation of credit default swaps and other derivatives.” Why did the financial geniuses of the Clinton administration seek to prevent that obviously needed regulation? Because the Clintonistas believed the Wall Street guys knew what they were doing and that what was good for them was good for us lesser folk. As Summers, who is the top economic adviser in the Obama White House, put it in congressional testimony back then: “The parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.”

Sounds nonsensical today: The inspector general’s report notes that AIG, because of the deregulatory law that Summers and Geithner pushed through, was “able to sell swaps on $72 billion worth of CDOs to counterparties without holding reserves that a regulated insurance company would be required to maintain.” But why, then, is Summers once again running the show with Geithner when both have made careers of exhibiting total contempt for the public interest? Because there is no accountability for the high rollers of finance, no matter who happens to be president.

Part of a post from a wise man in ottawa.........is that an oxymoron......"It came after more than a decade working with people literally from St. John's to Victoria, testing every aspect of the system, a website (five years), a civil filing and all the nonsense up to the courthouse steps and an IDA complaint that went all the way to regional council. And this continued to varying degrees with case after case. We had press, including coverage outside the country - as reflected so well on Kyle's site - all of these warnings with examples preceded the inevitable - the big bust that we are in now.

At the end of the day, I told people there were only two strategies that remained - one for financial services and one for the politicians. BUT, the public had to do it for themselves - as nobody would do anything for them.

Since Bay Street thinks only in dollars, the strategy was to have as many people as possible pull everything from a target bank/brokerage, publicizing what was being done and why; the second, since Ottawa (and the provincial capitals) think only in votes was to get as many people as possible to agree to block vote in exchange for improvements to the system.

Did these represent perfect solutions? NO! Both ideas landed with a thud - they meant people would have to act - they are used to whining and having someone else act for them. They just take it. That I will never understand.

Hugh is correct about public hearings, royal commissions or any other "dog and pony" show you can imagine - completely useless. He has participated in enough to know. And I used to organize these "pseudo" consultations. So I know!

Now I see that Hugh has turned bad cop and you, Larry, are asking for a public hearing (but you are flexible). Most frustrating of all is that, I see advocates going at one another - in this case Hugh - a little over the top - and not with total justification. Larry expressed support for your strategy and explained his rationale for his own. Larry, that is one hell of a good video. And the U's videos and other activities have been outstanding - credit where credit is due!

However, Hugh's plan has flaws too. In many cities in Canada, the Municipal Police are RCMP rent-a-cops, right out of basic training. They call it "community based policing." There are no resources at the levels of the Force that would allow them to fulfill the mandate they were given to deal with more sophisticated crimes - no matter how hard the police work a case. If a wronged investor goes to a local police station, and it is an RCMP shop, they will be out of luck.

The Officer will have no clue about white collar crime, and will most likely direct them to the regulators. He is a street cop. I find it hard to believe, based on my experience, that provincial or municipal forces - with rare exceptions - would be any different.

Logan seems like a good man and a good policeman, and I hear he did some good work. When he worked for Fantino, he worked for a close personal friend of Zacardelli, so he gets double points for doing the job and bucking the system. But bringing front line or even specialized police up to speed on even sophisticated white collar crime and resourcing them properly is not the whole answer either!

Larry has done extremely well in his public appearances, and his video, done at his own great expense, is now a "must see" for anyone with money invested. He is absolutely correct on the key point - the problem is with the law and the judicial system, and it originates at the public policy and legislative levels - and on the other end of the see-saw, a public that is as docile as sheep.

Our criminal code is fatally flawed, and that is not the case by accident. Canada has been a banana republic for years - money laundering, organized crime, terrorist financing, black ops - and we have been delighted to have the business. There are even policy papers that have been written which argue that laundered money and the proceeds of organized crime, once the original transaction is complete, go into the real economy and are no different from your paycheck. What ever happened to the ability to think critically?

White collar crime has been seen as non-violent and the proceeds get "spread around"....if you take my point. We rarely talk about that in Canada, but I have spoken with law enforcement and media people outside the country over the years - and - trust me - we are a laughing stock.

When 8 or 10 people try to make a stand, we end up fighting among themselves instead of concentrating our fire on the enemy. The police are defensive - who wants to admit, even to themselves - that they would be over their heads or that the case would never go to conviction if it involved one of our elites.

Not that it matters because Larry finally has it at the end of his very fine video - until people stop whining and make a stand en masse, this is it. And you know what - anyone - and I don't give a damn who it is - will get whatever they are willing to put up with in life, and they deserve it. There was a time when "victims" could rightly claim naïveté; those days are long gone. But they still get taken, and only the small Ponzi guys get busted.

Municipal, provincial and RCMP community police personnel do not have the expertise they think they have. Some don't know it, but their leadership has a reverse mandate - they can catch the small fry - but the major players are hands- off. If, by accident, a case is built, it goes to a Crown - who knows how to deflect the puck into the corner and away from the net!

Read the preamble to the Criminal Code; imagine the fun a Crown or an AG can have stopping any charge then and there. See the section that states fraud must intentional. Get it into court and the Judges are crooked, incompetent or get the word to make sure the elite are left unscathed - the Code is designed to facilitate that.

Add to that the Charter of Rights (a disaster). I wouldn't be a policeman for a million a year; if I were a part of the legal system, I would resign. And yes, when I was working, I resigned more than once. After the ABCP Ruling by the Supreme Court, Canada was officially a country brazen enough to show the world we were a country without the rule of law.

I understand that Centennial College is in the process of setting up courses to help buttress Hugh's plan...at the police level. That's great! And the RCMP is still turning out experienced police officers who know the score. But we still are stuck with the same Charter and Criminal Code.

Larry did not deserve that horse whipping, Hugh, and you and Di are as stubborn as he can be when someone challenges your grand design. I am not without sin on that score either. But until "the masses'' who now know, are willing to act in some way that will bring about change, nothing will change.

Canada is totally corrupt - in every sector - cancer spreads - that requires a corrupt or overly docile population. You cannot have this sort of thing go on for decades and not have it spread throughout a society. It takes the majority of people standing around and doing nothing to allow it to happen.

We small few have all given our best, and we should be respectful and grateful to one another - because sure as hell - we will never get any public recognition or appreciation from anywhere else (not that we would want it). But this group is one squadron that will never fly in formation. The elites have one; there formation is better, but far from perfect. The fight has gone out of the public; and so the least we can do now is be good to one another - we all deserve it. And I include in that number some of the solid policemen who soldier on realizing full-well that what they do is not "career-enhancing"!

Ironically, the elites know what they want, but they battle over the best way/s to get there too. That insight gave me a real chuckle. But they are winning, to quote Warren Buffett.

Like me, you have done all you can do, and then some! Larry at least knows that it will take "the people" beyond a certain point. Our situation always reminds me of the movie, "The Poseidon Adventure" - the majority insisted on going the wrong way or on doing nothing. At the end, the few brave and lucky souls who knew the ship was top down, and hoped the hull was not under water, made it through.

People trapped inside the ship throughout growled and argued and whined, and some acted - but in an ineffective way; very few acted in the right way and (with luck) made it to the bottom (IN THIS CASE THE TOP). In Canada, the Coast Guard would have been sent off in the other direction on exercises, and the survivors would have likely washed away.

We have all done above and beyond what we were capable of doing as responsible citizens of a democracy - now it is up to everyone else to join in - or surrender. Do you see what I see?